Australian bank reviews Satyam contract; may switch to TCS, Infy

NAB's Satyam outsourcing contract under review

BANGALORE: National Australia Bank (NAB) has put its outsourcing contract with Satyam Computer Services under review, as Australia's biggest bank seeks to mitigate the risks involved with outsourcing of mission critical applications to the scandal-hit Satyam. NAB, along with other Satyam customers such as Qantas, Telstra and Caterpillar are realising the harsh realities of offshore outsourcing, and could move their information technology projects to Infosys and TCS if the new Satyam board is unable to provide more clarity on the company's leadership. "We could even look at establishing our own captive centre as a derisking strategy," a senior official at one of these customer organisations told ET on conditions of anonymity. The Australian bank, which awarded outsourcing contracts for deploying and managing its core banking applications almost three years ago to Satyam and Infosys, finds itself in a difficult situation because Satyam is part of the bank's five-year IT transformation strategy involving over $250 million worth of outsourcing contracts. "As of now, Satyam is providing services, however, because of the developments, we are reviewing the contract, and we do have contingency plans as with any other supplier," said Brandon Phillips, a spokesperson for NAB. NAB has already moved over 200 IT positions to the vendor, said a person familiar with the contract requesting anonymity. Experts involved with NAB's outsourcing contracts added that Satyam has been a part of the bank's 18-month plan to migrate its ledger systems, scheduled to get over by September this year. "However, the current situation at Satyam is forcing NAB to reconsider whether it should risk its critical business transformation applications with the vendor at all," said an outsourcing expert who requested anonymity. Going forward, NAB had plans to outsource more projects to Satyam in the areas of account services and payments. "Infosys, which is already helping NAB deploy and manage some Oracle applications, could be the best option for NAB in the long run," the expert added.